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The author was able to give one example of a firm successfully being more profitable, and that because someone in a hiring role had a deep-seated belief that fe

The author was able to give one example of a firm successfully being more profitable, and that because someone in a hiring role had a deep-seated belief that female marginal product was equal to male marginal product (or at least, not as much lower as female wages from male) That's not what Greenspan thought at all. Greenspan thought you can get a $100k economist for only $80k. That belief is completely orthogonal to the distribution of employee quality. I don't think Indian developers are "equal" to American developers - I think they are (on average) a lot worse. (The bottom of the Indian developer market is a lot lower than the bottom of the US market, and the top of the Indian market tends to migrate west.) I also think I can get a $150k data scientist for $70k if I look hard enough. Further, given current rhetoric about pay in the tech industry, it may be unconscionable (or if you wish to be cynical, "it may lead to sufficient bad PR that it will blow away any positive results") to focus recruiting on an undervalued group but also continue to underpay them. So there may not actually be an arbitrage opportunity; any employer that would want to recruit an undervalued group may feel compelled to not act on the arbitrage as far as possible Interesting hypothesis; social barriers created by social justice types actually cause inequality to persist.

geofft 11y ago
> That's not what Greenspan thought at all. Greenspan thought you can get a $100k economist for only $80k. That belief is completely orthogonal to the distribution of employee quality. Hence "or at least, not as much lower as female wages from male". To expand on that unclear phrase: Greenspan thought that (output / market wages) for a female employee outpaced (output / market wages) for a male one; the scheme depended on those ratios, not on the raw values of output. But the important point is that he did so out of a personal confidence that the market was undervaluing women economists, not on any direct evidence. All available direct evidence, as evaluated by the market, claimed otherwise; that is why such a profitable arbitrage opportunity existed. Whether women's output and men's output are equal is beside the point of the anecdote. (I happen to think that he thought they were equal, but it is not relevant to the mathematics of the situation.) > Interesting hypothesis; social barriers created by social justice types actually cause inequality to persist. I'm not sure how you reach that hypothesis, primarily because there's no evidence that Greenspan's approach to hiring lessened inequality. In particular, the scheme only worked because women were being paid less money than men per unit output. I'm a little confused at the reading of this anecdote as "and then Greenspan realized that people were being sexist, and employed some women, and all was right in the world." In order to pay market wages for women economists, a market for those women at that wage needed to already exist; he admits that other places were hiring women for junior roles. He wasn't giving jobs to women when nobody else would; he was simply placing them in positions of more responsibility than other firms would, but paying the same wage. The beneficiary was not women, but his own employer's profits. My takeaway from the story is that markets can be so susceptible to human bias that even a valid, profitable arbitrage opportunity is rarely exploited, not that the existence of an arbitrage opportunity means the market will correct itself. (Also, at the end of the day, any firm profiting on any arbitrage has it in its own self-interest to avoid the rest of the market realizing that they're undervaluing a resource.... So, "social barriers" or no, the existence of an arbitrage opportunity has zero implication of a forthcoming fix to market-wide inequality.)
- yummyfajitas 11y ago
  Greenspan didn't need to hold any belief about market behavior; all he needed to do was hire without discriminating himself. I'm not sure how you reach that hypothesis, primarily because there's no evidence that Greenspan's approach to hiring lessened inequality... Of course it did; every person he hired got a higher wage than they would elsewhere.
  - geofft 11y ago
    > Of course it did; every person he hired got a higher wage than they would elsewhere. If you increase men's and women's wages proportionally, but are still underpaying women per unit work compared to men per unit work, I don't think you're lessening inequality. If you're increasing women's wages disproportionally, you're sabotaging your own arbitrage opportunity. (Maybe Greenspan thought there were more important things in the world than arbitrage.)
    - yummyfajitas 11y ago
      Hardly - if women's prevailing wage is $80 and men's is $100 (for men and women of equal ability), and you offer $85 but don't discriminate, you'll disproportionately hire women and you'll reduce inequality by $5 x # of women hired. You can safely do this without holding any beliefs about ability distributions.
      - geofft 11y ago
        But isn't that strictly financially worse for you than hiring women at $80 + epsilon, unless you have an expectation that the prevailing wage for women will soon increase? That is - if your primary motivation is doing what is economically rational (e.g. arbitrage), not reducing inequality, why would you ever do this, unless you have a strong belief that the market is undervaluing women?
        yummyfajitas 11y ago
        Because in the real world there are transaction costs and people don't shift jobs over epsilon=$1. See also efficiency wages; for a couple of extra grand you can get a lot of extra loyalty and goodwill.

geofft 11y ago

> That's not what Greenspan thought at all. Greenspan thought you can get a $100k economist for only $80k. That belief is completely orthogonal to the distribution of employee quality. Hence "or at least, not as much lower as female wages from male". To expand on that unclear phrase: Greenspan thought that (output / market wages) for a female employee outpaced (output / market wages) for a male one; the scheme depended on those ratios, not on the raw values of output. But the important point is that he did so out of a personal confidence that the market was undervaluing women economists, not on any direct evidence. All available direct evidence, as evaluated by the market, claimed otherwise; that is why such a profitable arbitrage opportunity existed. Whether women's output and men's output are equal is beside the point of the anecdote. (I happen to think that he thought they were equal, but it is not relevant to the mathematics of the situation.) > Interesting hypothesis; social barriers created by social justice types actually cause inequality to persist. I'm not sure how you reach that hypothesis, primarily because there's no evidence that Greenspan's approach to hiring lessened inequality. In particular, the scheme only worked because women were being paid less money than men per unit output. I'm a little confused at the reading of this anecdote as "and then Greenspan realized that people were being sexist, and employed some women, and all was right in the world." In order to pay market wages for women economists, a market for those women at that wage needed to already exist; he admits that other places were hiring women for junior roles. He wasn't giving jobs to women when nobody else would; he was simply placing them in positions of more responsibility than other firms would, but paying the same wage. The beneficiary was not women, but his own employer's profits. My takeaway from the story is that markets can be so susceptible to human bias that even a valid, profitable arbitrage opportunity is rarely exploited, not that the existence of an arbitrage opportunity means the market will correct itself. (Also, at the end of the day, any firm profiting on any arbitrage has it in its own self-interest to avoid the rest of the market realizing that they're undervaluing a resource.... So, "social barriers" or no, the existence of an arbitrage opportunity has zero implication of a forthcoming fix to market-wide inequality.)

yummyfajitas 11y ago
Greenspan didn't need to hold any belief about market behavior; all he needed to do was hire without discriminating himself. I'm not sure how you reach that hypothesis, primarily because there's no evidence that Greenspan's approach to hiring lessened inequality... Of course it did; every person he hired got a higher wage than they would elsewhere.
- geofft 11y ago
  > Of course it did; every person he hired got a higher wage than they would elsewhere. If you increase men's and women's wages proportionally, but are still underpaying women per unit work compared to men per unit work, I don't think you're lessening inequality. If you're increasing women's wages disproportionally, you're sabotaging your own arbitrage opportunity. (Maybe Greenspan thought there were more important things in the world than arbitrage.)
  - yummyfajitas 11y ago
    Hardly - if women's prevailing wage is $80 and men's is $100 (for men and women of equal ability), and you offer $85 but don't discriminate, you'll disproportionately hire women and you'll reduce inequality by $5 x # of women hired. You can safely do this without holding any beliefs about ability distributions.
    - geofft 11y ago
      But isn't that strictly financially worse for you than hiring women at $80 + epsilon, unless you have an expectation that the prevailing wage for women will soon increase? That is - if your primary motivation is doing what is economically rational (e.g. arbitrage), not reducing inequality, why would you ever do this, unless you have a strong belief that the market is undervaluing women?
      - yummyfajitas 11y ago
        Because in the real world there are transaction costs and people don't shift jobs over epsilon=$1. See also efficiency wages; for a couple of extra grand you can get a lot of extra loyalty and goodwill.